- The Washington Times - Tuesday, August 23, 2005

As you may have seen, a number of news organizations have been reporting in recent weeks the announcement by Gov. Mark Warner that this fiscal year ended with a $545 million surplus. This brings the total surplus to well over $2 billion.

Before we even started the 2004 regular General Assembly session (the year we passed the largest tax increase in Virginia history), we now know that Virginia was already running a more than $2 billion surplus.

Yep. $2 billion. Let me explain.

Virginia runs on a two-year budget. Each even-numbered year (i.e. 2004), the General Assembly with the governor enact a two-year spending plan, but it also enacts what is nicknamed a “caboose” budget. The caboose is an amending of the current spending for the July-June spending. So, when we went to work on the 2005-06 (which actually goes from July 2004-June 2006) budget in the 2004 session, we also amended the remaining five months in the 2003-04 budget. At that time, we were running a $324 million surplus, so we spend that additional money in the caboose.

Similarly, in this year’s 2005 session with the 2005-06 budget already in place, with a then forecasted $1.2 billion surplus on the horizon, we modified the 2005-06 budget in February to spend that additional $1.2 billion in revenues.

If the General Assembly is in session at a time when a surplus is found, but before the actual fiscal year ends, then it can appropriate that money any way it wants by developing a caboose budget. If an additional surplus is found between the time it adjourns (February/March) and the end of the fiscal year (June 30), then Virginia law stipulates where that surplus should go, such as the rainy-day fund.

That’s the situation we’re in now, and the subject of today’s news reports.

Now, nearly six months after we adjourned the 2005 session, the governor reports to the citizenry that there is yet an additional (unforeseen) $545 million as of June 30. This, of course, is on top of everything else we’ve found out since passing the 2004 tax increase of more than $1.6 billion.

I know all this may seem confusing, but the bottom line is this: Add the $324 million surplus we had at the end of FY 2004, plus the additional $1.2 billion we had walking into the 2005 session (which we spent in that session), plus the $545 million the governor just announced, and you have a $2.07 billion surplus Virginia is now running since the first day of the 2004 tax-increase session (this is before and without the tax increase).

Mr. Warner’s budget forecasting raises serious questions. The difference between what he forecast and what has actually occurred is more than 222 percent. That’s a 222 percent margin of error! This is the worst record of a Virginia governor in more than 20 years.

Many of us in the House of Delegates don’t see this as unintentional. Mr. Warner entered the 2004 session with the number one goal of raising taxes. It seems very possible that in order to secure the passage of those tax increases that ultimately occurred, he could not be honest with the people about the state of Virginia’s fiscal house. He had to cry wolf saying we were in a fiscal crisis, and in order to do so, had to make sure that economic figures didn’t undermine his position. So, he either kept the good news of massive surpluses from all of us, or proved to be outright incompetent when it comes to budget forecasting. For a guy who personally made millions in private business, I just can’t see Mr. Warner messing up this bad without it being on purpose.

I hope the background information I provided above helps put things into context as you continue to hear report after report of Virginia budget surpluses surely not to end anytime soon.

Delegate Jeff Frederick, a Republican, represents the 52nd District in the Virginia House of Delegates.

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